Foreign Investment: There is a major shift in investment in the world’s major economies. Dragon, long a favorite of foreign investors, is now losing its appeal. Instead, India has strengthened its position as the safest option for foreign investment. Foreign companies are investing a lot in India, especially in greenfield projects, i.e. start-up businesses. The latest data from the Boston Consulting Group (BCG) fully confirms this. These figures prove that India has left its biggest competitor far behind in terms of attracting foreign investment.
According to a Boston Consulting Group report, India has received a huge greenfield foreign investment of $351 billion from 2021 to 2025. This figure is very special in itself. If this investment is compared with China, the investment received by India is more than double. Another interesting thing has been revealed in this report. India’s performance has seen a spectacular jump of 61 percent over the last five years. In the previous five years, the country received $222 billion in investment for greenfield projects. This sharp rise shows how much investor confidence in the Indian market has strengthened on the global stage.
Foreign investors became obsessed with the dragon
On one hand, India’s graph is reaching a record high, on the other hand, danger bells are ringing for China. If we look at the BCG data, we can see that China’s foreign investment in new ventures has been adversely affected. China has faced a steep decline of 54 percent on this front. Between 2021 and 2025, it received only $159 billion in investment. The decline is also shocking because there was a time when foreign companies were queuing up to set up their factories there. At its peak between 2006 and 2010, China received $514 billion in FDI. Now these figures clearly show that the priorities of investors have completely changed. Concerns about China have arisen in the minds of foreign investors, due to which the flow of capital has shifted towards India.
A new global strategy to transform supply chains
Geo-political tensions are being observed across the world these days. Since the corona epidemic, large multinational companies have made major changes in their strategies. Nicholas Lang, managing director of Boston Consulting Group, shed light on the reasons for this change in detail. According to him, now companies do not want to be completely dependent on any one country. There was a time when companies bought all their goods from only one source, where they got cheap labour. But now they are shifting to a model of sourcing from two or three different countries. This strategy is known worldwide as ‘China Plus One’. In such a situation, India has a great opportunity to establish itself as a strong alternative. Nicholas Lang also believes that India is fully poised to play an important role in the changing times.
The fortunes of neighboring Asian countries also brightened
This new trend of investors is not limited to India. Capital outflows from China are also making inroads into other Southeast Asian markets. Industry experts believe that foreign companies are shifting their investments from China to countries like Malaysia. In terms of statistics, greenfield FDI in Malaysia has grown at a rapid pace of 125 percent to $140 billion. Similarly, Indonesia saw a 34 percent increase, leading to $133 billion in investment there. Thailand’s figure was no less, where investment jumped 97 percent to $56 billion. However, some countries also suffered losses during this period. Vietnam saw a decline of 12 percent, while investment in the Philippines also fell by 24 percent. However, experts believe that these countries will benefit from the ‘China Plus One’ strategy in the long run.
Roadmap ahead for India
The influx of foreign investment into the country is lifeblood for the economy, but maintaining this momentum is the biggest challenge. Nicholas Lang clearly states that if India wants to expand its manufacturing sector globally, it will have to continuously focus on a few fundamentals. Mere investment is not enough. India has to further accelerate its infrastructure development. Along with this, foreign companies have to be given better options in terms of costs so that their profits are maintained.
Skill development i.e. creation of skilled workforce is the most important part of this link. If the country does not have people who can easily handle modern things like assembly of heavy machines, modern painting techniques or mechatronics, foreign companies will always face difficulty in operating locally. Apart from this, Nicholas Lang also emphasized on creating demand within the country. India’s own domestic market is huge. If there is a good demand for products in this market, it will prove to be a very profitable deal for companies to invest money here.
